If you were a newly elected president just assuming office in 2017, you’d review the final reports of overall economic and job market performance under the outgoing administration’s watch and feel assured that the situation is about as favorable as it could be for you.
Indeed, the incoming administration inherits an economy where consumer confidence is high, unemployment is low, and workers at all levels are starting to see bigger paychecks.
Furthermore, there is enough momentum to maintain steady GDP growth while continuing to add jobs up till mid-term elections. Steering the course requires applying only a light touch and represents an easy win likely to generate much goodwill among large swathes of voters.
On the other hand, there are still several areas ripe for improvement. Achieving success in any of them would be both highly visible and readily attributable to your hand.
To make improvements that are meaningful to jobseekers over the next four years, the new administration will have to accelerate wage growth, increase productivity, and empower the long-term unemployed and underemployed.
Don’t let the news get you down
While most post-election news about the job market was upbeat, overall economic growth in 2016 ended on a somber note. The frenetic third quarter GDP growth subsided in the fourth, leading to an annual growth rate of 1.6 percent. Though respectable, the figure nevertheless represents below-average performance in the context of all 7½ years post-recession, where 2 percent annual growth is the consensus target.
Economic growth is of course tightly coupled with worker productivity, which likewise ebbed in the fourth quarter, growing at an annual rate of 1.3 percent compared to the third quarter rate of 3.5 percent. Consistent with overall economic growth in 2016, productivity increased at a similarly dampened rate of 0.2 percent, the lowest since 2011. In each of the years following the Great Recession, productivity has increased at a rate of less than 1 percent, which in turn is less than half the long-term rate of 2.1 percent covering 1947 to 2016.
Yet despite such apparent gloom, experts roundly advise against reading too much into these figures: they do not portend bad news, especially for jobseekers.
A little surprise found in our holiday stockings – extra workforce capacity
In January, the U.S. economy added 227,000 jobs, the largest gain in four months, and an increase of 70,000 over December’s figure. The larger than expected rate of jobs creation coupled with more workers entering the job market contributed to a 0.1 percent increase in overall unemployment, currently at 4.8 percent.
A significant milestone was reached in the last week of January, as new claims for state unemployment benefits fell 14,000 to 246,000. It was the 100th consecutive week that new claims have fallen below 300,000, the threshold commonly denoting a healthy labor market.
Wage growth and voluntary quits both lost some of their second half momentum. Wage growth increased only 0.1 percent over December’s figure, representing an annual increase of 2.5 percent, slightly lower than economists’ expectations. Voluntary quits decreased slightly to 11.4 percent, but still remains high.
Both figures suggest the economy might not be approaching full employment as quickly as was being predicted late last year, a key factor that prompted the Fed to raise interest rates.
Nice work, and you can get it
For jobseekers, the clear takeaways are the economy has extra room for growth, and there is ample evidence that the job market should be brisk for 2017.
Consumer confidence is high, reflecting optimism that the job market will continue to improve, offering greater wage growth and career mobility. In anticipation of business growth, more organizations are planning to hire in 2017 than in the previous year.
One indicator of such growth is an increase in temporary positions, which creates the necessary foundation for sustained future hiring. Another is an increase in factory output in response to new orders, which in turn drives price increases for raw materials, all of which suggests an emerging virtuous cycle for manufacturing growth.
Wage growth and skilled-labor shortages are also presenting major challenges to employers, especially for service, food and beverage, construction, and manufacturing roles. HR leaders in 2017 will likely find themselves having to experiment with many innovative organizational and technological solutions to find and retain critical staff, regardless of whether they occupy frontline or back office roles.
Jobseekers should take time in February of 2017 to filter out and reflect on the news that affects the roles and industries they want to work in and begin taking a long-term perspective on their careers. But be prepared to act quickly in the short-term on good opportunities that arise.
There are likely to be plenty of them.